Abstract: The developmental mechanisms of human and Drosophila blood systems show remarkable parallels. Most genes essential for the formation and maturation of Drosophila hemocytes are conserved in humans, and the majority is associated with hematopoietic malignancies. We have identified a new gene, zfrp8, controlling cell proliferation of the hematopoietic organs, the lymph glands. Several loss-of-function alleles in zfrp8 cause enormous hyperplasia of the lymph glands, over-proliferation of immature blood cells, and severe growth delay in other tissues. Zfrp8 and its human ortholog, PDCD2, are >50% homologous. PDCD2 appears to be involved in human blood malignancies. This conclusion is based on its regulation by the BCL6 (B-cell lymphoma 6) oncogene and its chromosomal localization to a region of chromosome 6q27, frequently deleted in human lymphomas. In some lymphomas, PDCD2 is present in the cytoplasm of normal lymphocytes, but is not detected in malignant lymphocytes, indicating that the gene may have similar function in cell proliferation in Drosophila and humans. In the bone marrow and blood of leukemia patients, we have detected a smaller than normal form of PDCD2, PDCD2?33, that is not detected in samples from healthy controls. PDCD2?33 is found in all the cancer cell lines we have tested and thus correlates with increased levels of cell proliferation and oncogenesis. Because of the Drosophila PDCD2/zfrp8 loss-of-function phenotype, strong hyperplasia of hemocytes, and the high level of expression of PDCD2?33 in malignant tissues, we propose that PDCD2?33 represents an abnormal/oncogenic form of the protein. Our experiments are aimed at defining the function of zfrp8 in normal lymph gland development and in growth of other tissues in Drosophila, and at characterizing additional genes, a few of which we have already identified, functioning with zfrp8. We also propose to define the gene products of PDCD2 in vertebrates, and to investigate their function in normal and malignant cells.